More pet signs of the Apocalypse
PetSmart Inc.’s four-footed clients canloungeonhypoallergeniclambskin blankets, watch television and snack on lactose-free, fat-free ice cream while staying at a PetsHotel when their owners are away.
The nation’s largest U.S. pet-store chain, with 909 stores, has set a goal of eventually opening 435 PetsHotels, a sevenfold increase from its current 62 locations.
“I’ve been inside stores that have hotels,” said Walter Todd, a money manager with Greenwood Capital, a PetSmart investor in Greenwood, S.C. “They are pretty impressive. You wouldn’t mind staying in one yourself.”
PetSmart customer Jean Rask, 76, takes her two dogs — 13-yearold Trixie, a border collie-German shepherd mix, and 12-year-old Pebbles, a Chihuahua — to a PetsHotel because she likes the care. They are also groomed during their stay.
The retired accountant’s assistant made reservations for her dogs to stay for two nights starting Christmas Eve at the PetsHotel in Whittier, Calif., about 20 miles from Los Angeles.
“They take good care of them,” she said. “They have these sheepskins in their little suites and they get clean ones every day.” The hotel costs her $46 a night for both dogs.
Dog owners pay about $31 a night for a suite, a room with a window that measures 4 feet by 7 feet. The suites have raised dog beds with lambskin blankets and a television. The television plays videos such as Walt Disney Co.’s “Lady and the Tramp” and “101 Dalmatians.”
Standard accommodations include cages with blankets and padded beds and cost $21 a night.
Prices include “Bone Booth” phone calls from a spot where pets can sit on an elevated cushion and chat with their vacationing owners with the help of the staff. About 40 percent of customers use the Bone Booth service, PetSmart said. Grooming and training services are extra, and ice-cream snacks cost $3 each.
Dogs receive exercise by joining their canine pals in a supervised indoor playroom with earth-tone concrete flooring and tile. Inside are chew toys and a minislide.
A survey last year by the Pew Research Center found that 85 percent of pet owners call their dogs members of the family, as do 78 percent of those with cats. Eighty percent buy holiday and birthday gifts for pets. Nearly 50 percent of women said they relied more on their pet’s affection than they did on their spouse’s or children’s.
“We are benefiting from the trend toward the humanization of pets,” said David Lenhardt, head of services for PetSmart. “It’s that passion for pets that makes the pet hotel work.”
Sales at PetSmart stores with lodging are 29 percent higher than those without it after the fifth year, PetSmart says.
PetSmart’s revenue from services, such as grooming, training and lodging, has increased an average of 27 percent annually during the past six years, and services are twice as profitable as selling pet toys and food, Mr. Lenhardt said. Sales at PetSmart stores open at least a year rose 4.2 percent in 2005.
“Services have been PetSmart’s saving grace,” said Mr. Todd, whose firm owned 159,900 PetSmart shares as of Sept. 30. “They’ve been pleasantly surprised by the success of the concept.”
PetSmart shares have more than doubled in the past five years, while the Standard & Poor’s 500 Index has risen 23 percent. PetSmart had sales of $3.76 billion last year, when it groomed 6.5 million.
PetsHotels notched sales of $16.7 million in 2005, double $8.7 million a year earlier. PetsHotels will add to profit in 2008 as more are built and existing hotels attract customers, said Joan Storms, a Los Angeles analyst at Wedbush Morgan Securities, which rates PetSmart “buy” and doesn’t own the shares.
Pet-item sales and services have the second-fastest growth for U.S. retailers after consumer electronics, says the American Pet Products Manufacturers Association Inc. The U.S. pet industry has expanded 36 percent to $45 billion in 2006 from 2000.
Going to the dogs never felt so good: The PetsHotel staff in Whittier, Calif., was ready to serve four-footed customers. Walter Todd, a money manager with Greenwood Capital, a PetSmart investor, called the pet hotels “pretty impressive. You wouldn’t mind staying in one yourself.”